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Opinion: N.J. residents have good reason to complain about taxes

Gov. Christie was at it again. Add Bill Dressel, the highly regarded longtime head of the New Jersey League of Municipalities, to the list of New Jerseyans who have been the target of our bombastic, name-calling governor.

Recently, our governor went after Dressel, calling him “a whiner, a moaner, a complainer.” His sin: The organization he heads issued a position paper that called for restructuring the New Jersey income tax and raising $6 billion to cut New Jersey’s property taxes. The plan would reduce property taxes by 35 percent and make up for the loss through changes in the state income tax. According to the League’s Property Tax Reform Task Force report, “the change would reduce by $2,700 the property-tax bill on the average home, whose taxes are now $7,700.”

Under the preliminary proposal, the state’s four lowest tax brackets would remain the same; the top bracket would drop slightly, from a top rate of 8.97 percent on income above $500,000 to 8.5 percent, but that new rate would be applied to the entire $500,000 or more of income. In addition, the property-tax deduction, tax rebate and Senior Freeze programs would be eliminated.

According to a June 12 NJSpotlight report, the big difference would be the way the state would levy the income tax: “Instead of charging a 2.245 percent tax on a $70,000 income, the state levies a tax of 1.4 percent on the first $20,000, 1.75 percent on the next $30,000 and 2.245 percent on income between $50,000 and $70,000. That leads to the current tax of $1,254. Under the League’s proposal, the 2.245 percent would be levied on the entire $70,000, leading to a tax bill of $1,715, or $461 more.”

Paul Mulshine pointed out in his June 16 column in The Times that “the League’s plan would “apply the rates not on the marginal income, but on all the income below it as well.”

The plan, which is patterned to some degree after the federal rate structure, was pronounced “garbage” by the governor. Dressel said the report, which was not officially endorsed by the League, described “one path to reduce property taxes, without increasing municipal budgets at all. It is not meant to be the last word, or a take-it-or-leave-it proposition” (The Times, June 13).

Any approach that reduces New Jersey’s over-reliance on property taxes as a means of providing local government services, especially primary and secondary education, is worth a look-see.

There is no doubt that income taxes, sales taxes on non-essentials and excise taxes are more equitable for senior citizens and others on a fixed income.

Depending upon how we look at the data, we are either No. 1 or No. 2 in the nation when it comes to property taxes. The conservative Tax Foundation found that New Jersey homeowners paid the most in property taxes compared to home value. There is consensus among fiscal experts that the property tax is the most regressive tax of all, as the burden is not based on one’s ability to pay.

While various aspects of the League’s plan trouble me (e.g. the reduction in the upper-income tax rate, the lack of a “circuit-breaker” that would trigger relief when property taxes reach a certain percentage of someone’s income and the plan’s lack of comprehensiveness), we desperately need an approach to funding government services that both reduces inequity and shields from taxation those who have enough income only for the bare necessities.

As a result of the current system of financing elections in New Jersey, which is largely fueled by and responsive to the wealthy, the Legislature and the governor will not propose a system of funding essential local government services that will enhance systemwide equity. The only way to have any chance of ending our state’s over-reliance on property taxes and replacing it with a fairer mix of taxes would be through a single-purpose constitutional convention that is not bought and paid for by special interests of the left or the right. This can only be achieved by strictly limiting the amount that can be contributed to candidates running as delegates to the convention.

My suggestion: Put a two-part referendum on the ballot statewide in which voters would be asked to 1) approve a temporary constitutional amendment to permit a convention that would propose statutory changes and a constitutional amendment and 2) vote “yes” or “no” on the following statement:

“I favor contributing a minimum of $5 to fund the campaigns of candidates for delegates to a statewide constitutional convention that would focus on the single issue of developing a comprehensive tax reform plan for New Jersey (a mix of taxes — not tax cuts). I understand that if a majority of delegates to the convention vote in favor of a plan, it would be presented to the voters of New Jersey for consideration.”

While I think this would be a terrific way to take an objective look at how to more fairly fund needed local government services in our state, given the inordinate influence of the rich and powerful, this modest proposal doesn’t have a chance in hell of getting on the ballot. That’s really sad.